Primark on the way back up after poor festive trading
Primark sales lifted as they recovered from weaker Christmas trading, reported the fashion chain’s owner, Associated British Foods. The clothing retailer, which runs 299 stores across Europe and the US, said sales at the business are up 7.5% over the the six months to February compared with a year ago, driven by new store openings.
The chain said it opened a net six new stores in the period, adding that operating margins at its two new shops in the US are “better than expected”.
The food, ingredients and retail group added that due to a weaker pound against the euro in recent weeks, it expects the currency impact on profits to ease to £10 million from earlier forecasts of £25 million.
However, the group said its full-year expectations remain unchanged. Analysts at Numis forecast AB Foods’ annual pre-tax profit will be little changed at £1.03 billion, compared with a year ago.
The conglomerate said like-for-like sales at its Primark stores improved since it reported weaker trading last month over the Christmas period amid the warmest December weather in over 100 years. It added that it now expects its fashion sales to be level with last year.
The group said it opened a pair of stores in Pennsylvania late last year, its first expansion into the US market.
It said it plans to open a further six US stores later this calendar year, as well as its first Italian outlet in Milan in April.
The group added its Kingsmill bread brand gained market share, although bread prices remain at eight-year lows as grocers use the staple food bread to draw in customers as part of the supermarket price war.
It said: “Although average [bread] prices have been stable for the last six months, they remain at their lowest level for eight years.”
Steve Clayton, head of equity research at broker Hargreaves Lansdown, said: “Primark is a behemoth, conquering all it comes up against. So far.”